CEOs need to focus on communicating

December 15, 2008
by Michael Kempner

We're steering through a financial crisis that has devalued home prices, put thousands out of work, and capsized the finance sector. Questions abound. For people facing mortgage payments, rising costs of living, dwindling investments, and the fear of losing their job, these questions aren't rhetorical.

We're steering through a financial crisis that has devalued home prices, put thousands out of work, and capsized the finance sector. Questions abound. For people facing mortgage payments, rising costs of living, dwindling investments, and the fear of losing their job, these questions aren't rhetorical. They are looking to leaders – to their boss, important community figures, or the steward of their investments – for answers.

These questions prompt another one: What is the role of today's CEO as it relates to communication during turbulent times? Should he or she be out front, fielding questions and providing answers? Or are the risks too great – is a CEO and the company more likely to survive if he or she sits quietly in the safety of his or her corner office?

The impulse to be silent is understandable. Wall Street's “Fear Index” is at a five-year high and managers have fears of their own. But the well-intentioned silence of leading companies is only feeding that fear. Confusion and apprehension breed mistrust. For CEOs to restore that trust, they must demonstrate why they've earned their post in the first place.

While it might seem counterintuitive, communicating now is an absolute imperative. It is less of a choice than a duty. Companies that remain silent do so at their peril, endangering the employees, shareholders, and communities they are tasked with serving. They might even endanger their own future.

At a time when all companies are being painted with the same brush and the market cares little for their balance sheet and product differential, companies need to communicate more openly. They need to communicate to key stakeholders to differentiate their strategy, engender faith in management, and clearly articulate corporate assets.

And, the critical value of internal communications has also risen in turn. The manner by which important information is shared with employees can have a longer-term impact than a short-term liquidity issue. In the most challenging environments, the ability to retain your best people is paramount – they own your customer relationships and serve as your brand's face.

Equally critical is the fact that doing the right thing now serves a more important, longer-term imperative – positioning the company for growth when conditions improve. Good companies that remain silent now risk being swept away with the bad. You don't need to have all the answers – frankly, no one does. Certainly, some issues are so complex as to defy an easy solution. Trust can be earned and confidence restored by simply acknowledging the issues, and outlining your plan to find the answers.

None of the above is to suggest that a CEO's worth should be measured in word counts. It is merely a matter of trust. Corporate reputations rely on trust – trust that the company's products or services will be of high quality; that the business will behave in a responsible manner; and that the CEO will be out front, offering hands-on guidance.

When the inevitable questions are asked, someone will respond. History has shown that people prefer any answer, even a wrong one, to no answer at all.
Michael Kempner is president and CEO of MWW Group.